Treasury Bill Calculator

Calculate T-Bill returns and pricing

T-Bill Details
T-Bill Results
Purchase Price: $0.00
Investment Return: $0.00
Discount Amount: $0.00
Bond Equivalent Yield: 0%

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What are Treasury Bills?

Treasury Bills (T-Bills) are short-term U.S. government debt securities with maturities of one year or less. They are considered one of the safest investments as they are backed by the full faith and credit of the U.S. government. T-Bills are sold at a discount to face value and pay the full face value at maturity, with the difference representing the investor's return.

T-Bills are an excellent cash management tool for conservative investors seeking safety and liquidity. They are auctioned regularly by the U.S. Treasury in denominations starting from $100. Income from T-Bills is exempt from state and local taxes, though subject to federal income tax, making them particularly attractive for investors in high-tax states.

How to Use This Calculator

Step 1: Enter the T-Bill face value - typically $10,000 or $25,000.
Step 2: Input the discount rate from the Treasury auction or your required yield.
Step 3: Enter days to maturity - 91 days (3-month), 182 days (6-month), or 364 days (1-year).
Step 4: Click "Calculate T-Bill" to see purchase price and yields.
Step 5: Review Bond Equivalent Yield (BEY) to compare with other investments.
Step 6: Compare T-Bill returns with savings accounts or CDs.

Examples

Example 1 - 91-Day T-Bill: Face: $10,000, Rate: 4%, Days: 91. Discount: ~$99. Purchase: ~$9,901. Return: $99 (1.0%). BE Yield: ~4.06%. Good for short-term cash parking.

Example 2 - 182-Day T-Bill: Face: $25,000, Rate: 4.5%, Days: 182. Discount: ~$563. Purchase: ~$24,437. Return: $563 (2.3%). BE Yield: ~4.63%. Better for medium-term cash.

Example 3 - 364-Day T-Bill: Face: $50,000, Rate: 5%, Days: 364. Discount: ~$2,500. Purchase: ~$47,500. Return: $2,500 (5.3%). BE Yield: ~5.26%. Maximum return for T-Bills.

Who Should Invest in T-Bills?

  • Conservative Investors – Seek safety of principal above all else.
  • Emergency Fund Builders – Park cash safely with government backing.
  • Corporate Treasury – Manage short-term business cash.
  • High-Tax State Residents – Benefit from state tax exemption.
  • Flight-to-Quality Seekers – Move money to safety during market stress.

Pro Tips

  • Create a T-Bill ladder with staggered maturities for regular liquidity.
  • Interest is state and local tax exempt - advantage over CDs in high-tax states.
  • No credit risk but inflation risk exists - returns may not keep up with inflation.
  • Secondary market available for liquidity if needed before maturity.
  • Auto-roll feature at TreasuryDirect reinvests automatically at maturity.
  • Buy directly from TreasuryDirect to avoid broker fees.
  • T-Bills serve as a safe haven during stock market volatility.

Frequently Asked Questions

What are Treasury Bills?
Treasury Bills are short-term government securities issued by the U.S. Treasury with maturities of 4, 8, 13, 17, 26, and 52 weeks. They are sold at a discount to face value and redeemed at full face value at maturity. No periodic interest is paid. The difference between purchase price and face value represents the return. Backed by the U.S. government, they are considered risk-free from credit default.
How are T-Bills different from T-Notes and T-Bonds?
T-Bills have maturities up to 1 year, pay no coupons, and are sold at discount. T-Notes have 2-10 year maturities and pay semi-annual coupons. T-Bonds have 20-30 year maturities with semi-annual coupons. All are government-backed but differ in duration, income pattern, and interest rate sensitivity. T-Bills have the lowest duration and are least sensitive to rate changes.
How do I buy Treasury Bills?
You can buy T-Bills through TreasuryDirect.gov (official government website, no fees) or through banks/brokers (may charge fees). Minimum purchase is $100. Auctions are held weekly. You can place non-competitive bids (accept whatever rate is determined) or competitive bids (specify minimum rate). TreasuryDirect offers auto-reinvestment when T-Bills mature.
What is the difference between discount rate and investment yield?
Discount rate is based on face value and used in T-Bill auctions: ((Face - Price) / Face) × (360 / Days). Investment yield (Bond Equivalent Yield) is based on actual purchase price and uses 365 days: ((Face - Price) / Price) × (365 / Days). Investment yield is always higher than discount rate and should be used when comparing T-Bills to other investments.
Are T-Bills tax-free?
T-Bills are exempt from state and local income taxes but subject to federal income tax. The discount/interest is taxable as ordinary income in the year the T-Bill matures. This state tax exemption makes T-Bills particularly attractive compared to CDs or corporate bonds for investors in high-tax states like California or New York.
Can I sell T-Bills before maturity?
Yes, T-Bills can be sold in the secondary market before maturity, though TreasuryDirect requires transfer to a broker first. Active secondary market exists for standard maturities. You may receive more or less than purchase price depending on rate changes since purchase. For guaranteed liquidity, buy through brokerage accounts rather than TreasuryDirect.
What is a T-Bill ladder?
A T-Bill ladder involves buying T-Bills with staggered maturity dates (e.g., one maturing each month). As each T-Bill matures, you buy a new longer-term one. This provides regular access to cash, averages rates over time, and maintains continuous investment. Example: $50,000 split into five $10,000 T-Bills maturing in months 1, 2, 3, 4, and 5.